Presenting the Budget 2019-20 in Parliament, Nirmala Sitharaman unveiled a slew of initiatives and new provisions to tackle issues related to the MSME sector in the country. From widening the net for a reduction in corporate tax for companies to strengthening TReDS, Sitharaman’s budget speech will have wide-ranging impact on small businesses. Here are the key takeaways:
1) Lower rate of 25 % Corporate Tax extended to companies with annual turnover up to Rs 400 crore from earlier cap of upto Rs 250 crore.
2) For the MSME sector, Rs 350 crore has been allocated for FY 2019-20 under the Interest Subvention Scheme, for 2% interest subvention for all GST registered MSMEs, on fresh or incremental loans.
3) The Finance Minister said that the Government will create a payment platform for MSMEs to enable filing of bills and payment. This will help eliminate delays in payment and give a boost to investment in MSMEs .
4) To bring more participants, especially NBFCs, not registered as NBFCs-Factor, on the TReDS platform, amendment in the Factoring Regulation Act, 2011 is necessary and steps will be taken to allow all NBFCs to directly participate on the TReDS platform.
5) Government of India has decided to extend the pension benefit to about three crore retail traders and small shopkeepers whose annual turnover is less than Rs.1.5 crore under a new Scheme Pradhan Mantri Karam Yogi Maandhan Scheme. Enrolment into the Scheme will be kept simple requiring only Aadhaar and a bank account and rest will be on self-declaration.
6) The Stand Up India Scheme has been extended upto the year 2025.
7) Skill development to focus on new-age skills like Artificial Intelligence (AI), Internet of Things, Big Data, 3D Printing, Virtual Reality and Robotics.
8) More than Rs. 3.75 Lakh Crore is blocked in litigations in Service Tax and Excise (pre-GST regime). The budget proposes a dispute resolution-cum-amnesty scheme, called “the Sabka Vishwas Legacy Dispute Resolution Scheme, 2019” that will allow quick closure of these litigations. The relief under the scheme varies from 40 percent to 70 percent of the tax dues for cases other than voluntary disclosure cases.
9) To ease the liquidity crisis in NBFCs, the Government says fundamentally sound ones should continue to get funding from banks and mutual funds without being unduly risk averse. For purchase of high-rated pooled assets of financially sound NBFCs, amounting to a total of Rs 1 lakh crore during the current financial year, Government will provide one time six months’ partial credit guarantee to Public Sector Banks for first loss of up to 10%.
10) “Make in India”, with particular emphasis on Micro, Small and Medium Enterprises, is one of the major focus areas of the Union Budget this year.
11) Under the Scheme of Fund for Upgradation and Regeneration of Traditional Industries’ (SFURTI) 100 new clusters will be set up during 2019-20 enabling 50,000 artisans to join the economic value chain. Focused sectors are Bamboo, Honey and Khadi clusters.
12) The Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship’ (ASPIRE) would be consolidated for setting up of 80 Livelihood Business Incubators (LBIs) and 20 Technology Business Incubators (TBIs)in 2019-20 to develop 75,000 skilled entrepreneurs in agro-rural industry sectors.
13) There will be an interchangeability of PAN and Aadhaar to file tax return proposed.
14) 2 % TDS on cash withdrawal exceeding Rs. 1 crore in a year from a bank account to encourage digital payments.
15) Businesses with annual turnover more than Rs. 50 crore to offer low cost digital modes of payment; no MDR charges to be imposed on customers/ merchants.